Roberto Brillembourg worked for Kraft foods this summer on
Tassimo--a
single-serve coffee maker that uses coffee pods or T-Discs. T-Discs
can can be purchased in retail stores or online either one-at-a-time
or through a
continuity program.

The brand team's hypothesis was that the continuity program is the
most valuable channel and hence worthy of marketing investment.
Specifically the team thinks that single serve coffee is an
expandable consumption category where the T-Discs on hand causes
increased consumption. Pushing the continuity program would
therefore lead to increased consumption.

What we know is that, continuity users drink a lot of coffee. The
brand team thinks that this is because the continuity program
affects consumption. Roberto thinks it might be that heavy users
just tend to join continuity more often.

To examine this question, Roberto found a tracking study which
montiored weekly coffee consumption for thousands of households over
a two year period using a microchip placed in their Tassimo coffee
machine. Half of the observations were "on continuity" while
the other half was "off continuity".

Initially Roberto observed that overall average consumption “on” was
higher than the average of consumption “off” continuity. For
individual consumers who where sometimes in and sometimes out, their
average consumption was usually higher when in the continuity
program.

Because of the strong seasonal trends, however, these averages could
be misleading. For example temperature (blue) clearly has an inverse
relationship to consumption as show below:

Roberto used regression analysis to control for the effects of
seasonality and temperature to get a better measure of the lift
provided solely from the continuity program. The continuity variable
had a high T stat with a positive coefficient. Hence, the regression
demonstrated that when people join continuity they tend to consume
more T-Discs per week than they normally would.

Kraft marketing used this information and moved forward with the
incentive program. The regression results helped determine how much
money to spend on incenting consumers to enter this continuity
channel.